Nasdaq and S&P 500 post worst week since June as AI selloff deepens; Dow ekes out weekly gain
The Nasdaq composite fell 2.1% on Friday and 4.5% for the week as chip stocks slid again on worries about the AI buildout. The Dow lost 0.3% on the day but finished the week up 0.7%.
How indexes closed Friday: The S&P 500 fell 84.62 points, or 1.1%, to 7,659.44. The Dow Jones Industrial Average fell 175.28 points, or 0.3%, to 52,002.41. The Nasdaq composite dropped 572.99 points, or 2.1%, to 26,140.03, and the Russell 2000 slid 45.90 points, or 1.7%, to 2,721.37, the Associated Press reported. Chip companies pulled back again, with Micron Technology down 5.6% and Intel down 5.8%, AP said.
The week: The S&P 500 lost 1.9% and the Nasdaq 4.5% for the week, both their worst weeks since June, according to AP. The Russell 2000 fell 3%, while the Dow gained 0.7%. T. Rowe Price’s weekly market update said the Russell 1000 Value Index outpaced its growth counterpart by more than 5.50 percentage points as investors rotated away from large-cap growth stocks toward value-oriented and defensive parts of the market.
Why tech fell: Worries deepened about how long the frenzy over the AI buildout will last, AP reported. T. Rowe Price said concerns about the sustainability of AI-related investment appeared to be a major driver of the week, with semiconductor and memory stocks under scrutiny over financing needs, valuations and potential returns on AI infrastructure spending. Hotter-than-expected inflation data and the start of third-quarter earnings season added to the pressure, the firm said.
Inflation and rates: September consumer prices rose 3.7% from a year earlier, and wholesale prices rose 6.3%, the largest annual producer-price increase since December 2022, T. Rowe Price noted. Treasuries still rallied as the tech selloff appeared to fuel demand for government bonds: the 10-year yield fell to around 5.09% by Friday afternoon from about 5.24% a week earlier. CME FedWatch data showed roughly a 17% probability of a rate hike at the Federal Reserve’s October meeting, little changed from the prior week, the firm said.
Why it matters now: For the year, the S&P 500 is still up 11.9% and the Nasdaq 12.5%, AP said, so the week dented rather than erased 2026’s gains. The Dow’s weekly gain against the Nasdaq’s 4.5% drop is the clearest sign of the rotation from growth to value that T. Rowe Price described.